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The role of the Internet in American consumers’ shopping behavior evolves constantly as new innovation and advances in the space emerge. As if the change in media consumption and technology isn’t enough, the struggling economy has also greatly impacted consumer sentiment and buying behavior. The complex nature of this amalgam demands that marketers better connect and engage with consumers, specifically through digital advertising.
In “Seeing the Patterns”, Yahoo! and MediaVest set out to understand the current state of advertising with respect to the purchase process, while also providing insights to enable marketers to better understand and engage their audience through digital advertising. The larger questions we asked were the following:
- What is the impact of the economy on consumer shopping behavior and thinking? Is marketing communication reflecting how consumers think about “value”?
- How is digital advertising pushing, pulling, persuading the path forward? What kinds of digital ads do people remember and why and when?
- Are there more effective strategies to inform and influence consumers?
- How can retail marketers further strengthen their online advertising strategies?
For this study, Yahoo! & MediaVest drew from the wealth of experience and knowledge from others. One example is from Marco Bertini and Luc Wathieu’s recently published study around pricing strategy in The Harvard Business Review. Bertini and Wathieu wrote that “commodization is as much a psychological state as a physical one…buyers display rampant skepticism, routinized behaviors, minimal expectations, and a strong preference for swifter and effortless transactions regardless of product differentiation.”
The authors go to discuss how pricing to the bottom has created “low expectations” that “will make consumers more disengaged. They start to fixate on price and nothing else… with constant undercutting to capture customers can spur efficiency gains through mass, but more often damages brand equity and erodes profit margins.”
This point is important because retailers currently leverage digital advertising with primary focus on “price and deal informing”. “Seeing the Patterns” discovered that consumers feel overwhelmed and over informed before a purchase decision leading to frustration. These feelings about the noise in the digital space results in consumers being defensive about the marketing messages they are encountering. As such, we are seeing a new set of “control strategies “ emerge as a way to cope with the following:
- They don’t trust advertising because everyone claims to have “lowest price!”, or “best deal!”
- Consumers feel the majority of messages they encounter are irrelevant to their needs, and glazing over most ads has become common practice. They are now seeking relevant information on their own terms.
- Consumers are facing a crisis of confidence when it comes to making online purchases and are going to great lengths to gather the information needed to make a confident purchase. This is reflected with purchases across the entire price spectrum, not simply high ticket items, resulting in a longer buying process.
These coping strategies should serve as a wake-up call. What marketers are feeding consumers currently might be tempering the influence they want to have in the first place.
Consumers today are no longer just interested in being told brands have the best deals or lowest prices. In fact, regardless of the economic sentiment – whether they have been impacted negatively or not at all, when it comes to their purchases, quality is the differentiator over the lowest price. This may prove counter intuitive in a rocky economy.
Consumer definition of value has also evolved to more than just price. They define “value” as a combination of extra’s + quality + what the brand means to them with price as the counterpoint. While that may seem intuitive, marketers are certainly not messaging to consumers that way today. Consumers are expecting marketers to teach them about value through their messages and willing to pay more to both get more and feel more.
Going back to Bertini’s article about pricing strategy, “pricing to the bottom is not the answer.” Nor is communicating that end benefit so strongly to the end consumer through digital advertising. If advertisers plan to cut through the clutter with their marketing messages, they must consider varying their approach to speaking to consumers online:
- Message both definitions of value online: Value for less & Value that matters
- Leverage online advertising to create emotional bonds, stronger ties with consumers, and differentiate from the competition
- Understand the new dimensions of “value in 2010” and leverage communication that resonates by category
- Minimize the triggers for “control” strategies and speak authentically
- Seize every opportunity when consumers are online, manage the environment because they are rarely in purchase mode
The implications can be applied directly to the way marketers speak to consumers today. How do w re-engage a buyer who is past caring? In the same way, what are the better ways to understand messaging and communication based on consumer’s talk about the concept of value when it comes to their last purchase?
Download the study today and let’s work on connecting better and seeing the pattern.